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"Why was there a boom in the United States of America in the 1920's?"

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Essay on, "Why was there a boom in the United States of America in the 1920's?" This essay will state exactly why there was an economic boom in the 1920's in the USA. The essay will also consider what events took place before the 1920's to make the USA's economy boom. Before the 1920's there was World War I, this war ended in 1919, it had a major part in allowing the USA to have an economic boom. This is because the countries in the war from the start were running out of money so they borrowed money from the USA, as well as buying military goods and ammunition from them. This meant that the USA were receiving money and had given out loans with interest to countries. As the USA only cam into the war in 1918 the war was nearly over, once the war had ended and the Allies were victorious the USA had only lost about 100 000 men, this was a small amount compared to other countries. ...read more.


This meant that investors could buy shares if they paid a 10% deposit and the stockbroker would pay the rest but he would be paid back with interest. Once the share rose in value the investor would sell the shares paying back the loan whilst making some profit. The stock exchange was heavily invested in the 1920's as it was thought to be an easy way of making money, also credit for this was available so there were more available investors as they had plentiful finance. The public thought that the boom would not end so they continued investing; they also didn't know the economy goes around in circles. The stock exchange was easily accessible as there was the buying "on the margin". This brought about confidence, if the people of the USA had no confidence then there would not have been an economic boom. The confidence was in the economy and their jobs; they spent more money on the economy because they were confident of their jobs, and knew they would still be getting money. ...read more.


The Republican policies gave businesses the chance to expand without government restrictions or excessive taxes. These were the Laissez- faire policies, as the president did not check the economy; they did not control the economic boom. They kept the taxes low so businesses could expand freely. This increased public confidence in the economy, the president introduced tariffs to protect the American industries from foreign competitors. Tariffs limited the competition from cheap foreign exports into America by having the Fordney McCumber tariff; this was a 30% import duty so that exports prices would be more than those of Americas. This also led to the protectionism of the American industries so that they could expand and their products were bought so that money could go back into the industries. By having tariffs the American companies and industries were saved and protected. In conclusion, I believe that there were many causes for the boom and the reasons listed above are just the main points. The three most important reasons for the economic boom are: 1. The money from World War I. 2. The confidence that the pupil had n the economy, if 3. The high credit and the stock exchange helped a lot, ...read more.

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